ORIX Corporation (NYSE:IX) Q1 2026 Earnings Call Transcript

ORIX Corporation (NYSE:IX) Q1 2026 Earnings Call Transcript August 7, 2025

ORIX Corporation beats earnings expectations. Reported EPS is $0.65, expectations were $0.54.

Sachiko Nakane: So we now would like to get started. Thank you for joining this telephone conference of ORIX Corporation for first quarter financial results for the 3-month period ended June 30, 2025. I am Nakane from IR. We have today as an attendee Kazuki Yamamoto, Operating Officer in charge of Investor Relations. Yamamoto-san will explain, and this will be followed by Q&A. We plan to have a 1-hour session. So over to you, Yamamoto-san.

Kazuki Yamamoto: Thank you very much for taking the time to attend the ORIX Group’s earnings call today. I’m Operating Officer in charge of Corporate Planning and IR. I am Kazuki Yamamoto. Let me quickly explain the financial results for the first quarter of fiscal year ending March 2026. On Page 2, you can see this page contains the key points I want to cover today. The first point is net income and ROE. Net income for the first quarter was JPY 107.3 billion, an increase of JPY 20.6 billion year-on-year with an annualized ROE of 10.4%, against the annual forecast, JPY 380 billion progress rate was 28.2%. As was announced in July, we plan to record gains from the sale of Greenko and ORIX Asset Management and Loan Services Corporation in the second quarter and earnings are favorable.

Meanwhile, considering the increasing macroeconomic uncertainty, it is necessary to carefully review our planned H2 exits and second half performance in line with the market. While we expect earnings to be more heavily skewed to H2, we are currently undertaking a thorough review of full year net income target. Second is pretax profit and capital recycling. Pretax profit was JPY 455.5 billion, an increase of JPY 35.3 billion from last year. Finance, operation and investments in all three categories saw profit increases year-on-year. Investments, including the Hotel Universal Park Vida, and other valuation gains are from listed stocks recorded a total capital gain of JPY 45.1 billion from multiple gains on exits. Number three, shareholder returns.

As of the end of July, we have completed the acquisition of JPY 40.9 billion out of total JPY 100 billion share buyback program announced in May this year. We will continue to repurchase shares based on the existing program and aim to flexibly implement our shareholder return policy based on both our full year outlook and progress with new investments. As in the previous fiscal year, our current policy is to set the interim DPS at a payout ratio of 39% in first half net income. Please go to the next page. As outlined earlier, for Q1, ORIX reported net income of JPY 107.3 billion, up 24%, ROE was 10.4% annualized. In light of the investment gains we expect to book in Q2, the outlook for first half is very strong. Please go to Page 4. I’ll explain pretax profits for each of the categories.

Three categories: finance, operation and investments. You can see first quarter results of the previous and current fiscal year. First, at the top, the dark blue bar is finance. Profit increased by 5% year-on-year to JPY 49 billion with a progress rate of 27% against full year forecast. Corporate Financial Services and Banking were generally solid. ORIX Life increased its investment income and finance revenues grew in Australia and Singapore. Next slide, second, from the top, light blue shows operation. Profit increased by 5% year-on-year to JPY 55.8 billion with a progress rate of 24% against the full year forecast. In the Environment and Energy segment, we closed the sale of ZiekLight, which operates waste disposal plans and recorded a gain.

Q&A Session

increased its electricity sales revenue and the Kinokawa energy stores plant, one of the largest in Japan began commercial operations last December, which also was a contribution. Furthermore, Rentec saw higher equipment rental income on Windows PC placement demand and airport concessions continue to see growth in international passenger numbers. Finally, red bar in the third row from the top shows investment. Profit increased significantly by 61% year-on-year to JPY 60.1 billion. In addition to the gain from the sale of Hotel Universal Port Vita, valuation gains on our remaining stake in NICE listed renewable energy company, Ormat contributed to this result. Performance at domestic PE investees was solid, resulting in growth in profit contributions.

As a result, segment profit for Q1 increased by 20% year-on-year to a total of JPY 164.9 billion. Pretax profit increased by 29% year-on-year to JPY 155.5 billion. The difference of JPY 9.4 billion between total segment profit and pretax profit is administrative expenses. Please go to Page 5. On this page, I will explain ROE and shareholders’ equity for each of the three categories. Towards the right, please look at the graph. In dark blue is finance, ROE. This improved from 8.2% at the end of the previous fiscal year to 8.7% plus 0.5%. We are disclosing the amount of allocated capital by category beginning this fiscal year. And for finance, it is JPY 1.7 trillion. The light blue circle towards the left. With the sale of Zeeklite, ROE for operation improved from 13.5% to 14%, likewise, up 0.5%.

Allocated capital was JPY 1.2 trillion. The red category investment rose from 7.4% to 10.3%, significant increase due to sale of hotels. The allocated capital is JPY 1.7 trillion. The total allocated capital, if you add all them up is JPY 4.5 trillion, which is slightly different from shareholder equity amount of JPY 4.1 trillion on this consolidated PS. This is because allocated capital is based on management accounting. So that is why it’s higher. Next, on Page 6, regarding the ROA and asset size of the three categories. You can see that finance and operation remained stable and investment improved its ROA in the first quarter. Page 7, this is the matrix chart of 3 categories and 10 segments as a change. We have added in business verticals, the transportation equipment for row from the bottom in the operation column, we have added ship brokerage company, Sojitz.

Page 8 shows progress in capital recycling in first quarter we recorded capital gain of JPY 45.1 billion, as you can see in the center, with cash flows from sales amounting to JPY 130 billion below that. And cash flows — outflows from new investment executions amounting to JPY 150 billion. Major new investments in the first quarter include PE investment in the capsule toy specialty store operator, LULUARQ as well as aircraft and We also have announced the sale of our partial stake in Greenko, a new investment in AM Green and the sale of ORIX Asset Management and Loan Services Corporation, you can see towards the right. We aim to close the Hilco Global transaction by the end of September 25. So — regarding Greenko AM Green transaction and Hilco, I will provide some additional information in the following slides.

Please go to Page 9. This is about the Greenko share transfer agreement and our new investment in AM Green. We held 20% of the shares in Greenko, a major Indian renewable energy company and sold 17.5% to AM Green Power, a company-owned by the founders of Greenko, or you can see the structure in the chart. The sale proceeds were USD 1.282 billion with a gain on sale of JPY 93.4 billion. This amount are unchanged from previous announcement and will be finalized at the time of Q2 financial closing. We plan to continue to hold our remaining 2.5% stake in Greenko for the time being. Meanwhile, AMG, the parent company of AM Green Power plans to produce 5 million tonnes of green ammonia annually as a group and is advancing green hydrogen and green ammonia production projects.

AMG has also agreed on basic terms with Germany’s energy company, Uniper SE and Belgium’s ammonia trading and sales company, [ Yara ] Green ammonia to supply green ammonia to Europe. We have invested in convertible notes issued by AM Green Luxembourg, the 100% owned parent company of AMG. The amount is $331 million. The transfer of Greenko shares and the investment in convertible notes of AMG parent company are part of our portfolio optimization strategy achieved through capital recycling in the globally evolving renewable energy industry. Next, moving on to Page 10. Our investment in Hilco Global. ORIX has agreed with stakeholders to acquire 71.4% stake in Hilco Global, a world-leading company in asset valuation we signed in July. We are moving forward in accordance with the transfer agreement and aim to complete the acquisition by the end of September.

Since its establishment in 1987, as you can see towards the right, Hilco Global has gradually expanded its businesses to include asset valuation services, asset-based lending and inventory sales and asset liquidation within the group. The first asset valuation service provides to banks and others, appraisal services for collateral assets. The second asset-based lending refers to the provision of loans collateralized by various assets. And third, inventory sales and asset liquidation involves the purchase and resale of inventory assets among other things. Hilco — with Hilco Global joining the ORIX Group, ORIX USA will acquire a platform or ABL, Hilco origination capability and value increase model can be utilized to ORIX USA. By utilizing third-party investor funds, we hope to further expand the ABL business and promote the asset management business centered on private assets and real assets.

Next — please turn to the next page. The investment pipeline outlined on this page is ample at JPY 2 trillion, and heavily focused on operational investments. We are aiming for sustainable growth by investing both in projects and contribute to revenue immediately after investment and those requiring longer development periods. Please turn to Page 12. Now this is about inbound and tourism. The concession business centered around Kansai International Airport experienced growth in international passenger numbers due to inbound tourist demand, and performance is steady. The performance of Kansai Airport is reflected in ORIX consolidated results with a 3-month lag. So Q1 results reflect Kansai Airport performance from January to March of this year.

However, with the start of EXPO 2025 Osaka in April and the launch of international charter flights at Kobe Airport in April, we expect earnings growth to continue. In facility operations, RevPAR at hotels has been improving, primarily in the Kansai area. In this January, Suginoi Hotel opened a new building, Kushin. And in April, Hilton’s top luxury brand, World of Astoria or Osaka also opened at the Umekita area. We anticipate steady demand for facility operations such as hotels and inns in the future. But due to the impact of inflation and rising construction costs, we will carefully select new investments while aiming for sustainable growth. For the aircraft and ship segment, including aircraft leasing, is performing well and increase in passenger traffic, mainly in — the — we expect these three tourism-related business, including those impacted by inland tourism to continue to drive performance this fiscal year.

Page 13 and 14 are the summary of segment information. For details, please refer to the slides from Page 18 and onwards. But first, let me give you the report about the corporate financial services and maintenance leasing. Segment profit increased by JPY 3.8 billion or 19% year-on-year to JPY 23.6 billion. The Corporate Financial Services unit saw growth in fee revenues, resulting in higher profits. The auto unit continued to benefit from a strong used car market, achieving record profits for the first quarter. Rentec expanded its inventory based rental of ICT equipment, thanks to Windows PC replacement demand and increased its profit. Segment assets amounted to JPY 1.87 trillion, a decrease of JPY 14.6 billion from the end of the previous fiscal year, reflecting the sale of ORIX Asset Management and ORIX Services Corporation.

Next, segment profit for the real estate was up by JPY 21.9 billion, an increase of 157% year-over-year to JPY 35.9 billion. So this is due to the sales of the Hotel Universal Port Vita and a sharp increase in facility operation earnings in hotels and inns has contributed. Assets in the Real Estate segment was flat versus the end of last fiscal year. For the PE Investment & Concession segment, recorded a decrease of JPY 8 billion year-over-year or minus 25% is segment profits, reaching JPY 24 billion, out of which investment unit reported lower profits owing to the absence of a gain on the sale of Sasai Holdings recorded in the previous year. On the other hand, the performance of existing FSTs such as DHC and Toshiba was strong, resulting in profit growth when the impact from the aforementioned reason is excluded.

In the concession unit, as mentioned earlier, included impressive performance at Kansai International Airport, a slight decrease in profit compared to the previous year is due to seasonal factors. The segment assets for PE investment concession increased by JPY 31.6 billion from last fiscal year to JPY 1.545 billion. The main reason for the increase was a new investment in increased equity method investment income from investees. Segment profit for the Environment and Energy segment increased by JPY 18.4 billion year-over-year to JPY 17.9 billion. In addition to the gain on sales of shares of Zeeklite, both sales volume and unit sales price in the electricity retailing business increased. As I have mentioned, the start of operation at the Kinokawa Energy storage plant had a positive impact.

Additionally, recovery in electricity sales revenue from and valuation gain in Ormat shares also contributed to the increase. Segment assets were slightly lower, owing to capital recycling and the ForEx impact. Segment profits in the Insurance segment was up JPY 2.1 billion or 10% year-over- year to JPY 24 billion. Profits were higher on the growth in investment income and performance improved sharply quarter-on-quarter. So because we have booked the losses on the sales of branch associated portfolio reallocation, you can see the performance improved based on this reason. On the business side, this June, we have started the sales of revised insurance income protection insurance keep up. This has been strong. Segment assets were up JPY 38.8 billion to JPY 3.177 trillion — JPY 47.7 billion, excuse me.

For the segment profits in banking and credit were up JPY 3.5 billion or 51% year-over-year to JPY 9.9 billion. So in terms of the environment, what the interest rates were rising and the funding cost for deposits are becoming higher, the yield on total investments is improving. For the first quarter, due to one-off factors, the profit has grown. Segment assets were up JPY 71.9 billion to JPY 3.2165 trillion. In July, ORIX paid the parent company a JPY 30 billion dividend with the aim to improve the segment ROE. In the Aircraft and Ships segment, segment profit decreased by JPY 1.9 billion, a 16% decline to reach JPY 9.9 billion. Although there was a slight decrease in profits for aircraft, the business outlook remains positive as the number of owned aircraft increased amid high lease rate levels.

Avolon saw an increase in profits compared to the previous fiscal year, partly due to profit contribution from Castlelake, which was acquired in January this year. In terms of the credit rating, in May of this year, Moody’s and Fitch upgraded the rating. Standard & Poor’s has revised its outlook to positive. In terms of the critical situation, they enhance their health. The ship segment experienced a decrease in profits due to the reduced financial income from ship financing and the market factors but the impact from tariffs is limited. Segment profit for the ORIX USA segment decreased by JPY 11.2 billion year-over-year, amounting to JPY 600 million. The budget for ORIX USA forecast earnings to be more heavily concentrated to the first half.

And earnings are generally in line with the forecast. The private credit business experienced a decrease in profit due to the absence of reversal of credit costs booked in March fiscal 2025. Real estate profits were down on the absence of gain on the sales of a fund equity stake that was booked the previous year. The main reason for the decline in profits in the private equity business was the impairment of our investment in an equity method affiliate owing to the tariff impacts coming between United States and China. Segment assets decreased by JPY 5.7 billion to JPY 1.52 trillion. ForEx had a negative JPY 51.7 billion impact, but assets increased slightly in U.S. dollar terms as we made a bolt-on investment aiming to enhance the value of an existing investee in this business.

The segment profit of ORIX Europe was JPY 1.2 billion lower year-over-year. This is 11% decrease to reach JPY 9.9 billion. The decrease in profit is due to the presence of performance fees recorded in the same period of the previous year. On the other hand, ORIX Europe continues to see net net inflows, expanding AUM to a record high of JPY 401.9 billion, mainly coming from Robeco and management fees are on the rise. Lastly, in the Asia, Australia segment, profit increased by JPY 100 million year-on-year, reaching JPY 9 billion. Although income from investees in the Greater China region was lower, financial revenues from leasing in Australia and Singapore increased resulting in profit growth. Segment assets decreased by JPY 13 billion from the end of the previous fiscal year to JPY 1.7126 trillion.

This decline is mainly due to the maintaining a conservative investment and financing stance in the Greater China region. This concludes the explanation of each segment. Please turn to Page 15. This slide is about the shareholder returns. Regarding the acquisition of treasury stock at the end of July, we have acquired JPY 40.9 billion of the total JPY 100 billion buyback program we announced in May. Regarding the interim dividend, as mentioned at the beginning, the current dividend policy is set at a payout ratio of 39% versus the first half net profit. As I have explained in the second quarter, we anticipate gains from the sales of Greenko and new investments. And for our full year earnings forecast is currently under review. We will inform you any updates if there is progress in this area.

Please turn to Page 16. This slide is about the ROE and EPS growth and enhancing corporate value. Since announcing the 3-year medium-term plan and long-term vision in May, our CEO, and COO Takahashi, have been actively engaging in direct dialogue with institutional investors, both domestically and internationally. In this context, we will strive to enhance the corporate value by increasing opportunities for direct dialogue with the market and focusing on probing ROE, which is our most important management goal as well as EPS growth and capital costs, which we also consider as critical. So this is the end of remarks for the first quarter results. Thank you for your attention.

Unidentified Analyst: [Operator Instructions] This is Sato-san from JPMorgan Securities,

Koki Sato: This is Sato from JPMorgan. I have one question, mainly in the US-related business, what are your views as to the risk arising from those businesses? The tariff was agreed with U.S. and there was evolution of incentives for renewable energy. So your existing assets or any of your renewable energy businesses, will it impact your strategy? And apart from that, regarding exposure in the U.S., what is your view? And how do you see it?

Kazuki Yamamoto: Thank you for your question. First of all, ORIX US. Let me talk about the business outlook. If you could refer to Page 33, I would like to make additional remarks. ORIX USA, focusing on middle market, it provides finance solution and mortgage business for the real estate and also PE investments. And right now, with inflation and Trump’s tariff, the interest is now high. So especially when it comes to real estate mortgage finance and investment in operations — businesses, the environment is against wind segment, profit is JPY 14 million per operation. So we have been rather conservative. So we’re in red. And as was mentioned in a minority investment due to tariff we have been recognizing impairment for some of them.

So we will be conservative and try to reduce the level of our assets and for the real estate the high interest rate is continuing more so than we had expected. So we have been struggling in origination for investing in properties. So we are focusing on asset management. So for the segment profit, we are now more or less breakeven. So given this environment, whether it will improve or not, it continues to be opaque. The fundamentals in the U.S., we don’t consider this to be bad, but for ORIX USA business, to a certain extent, we need to take into consideration the possible capital recycling. Meanwhile, the credit business has been quite solid. Average loan structured finance and infrastructure finance in these areas. In these debt services, we have achieved a solid result.

Having said that, using balance sheet for some of the businesses, we will have to minimize the risk as much as possible. Also, we would like to drive our asset management. So we will pursue a hybrid model between our own equity and third-party fund. And for Hilco Global, this is rather countercyclical. It’s very strong against the economic cycle in overall the U.S. So we will continue to invest in Hilco Global and shift to a better profitable assets. We need to recycle. And as to your question about the tariff by Trump, about we renewable energy. The direct exposure in the U.S. is quite limited. However, for renewable energy as an infrastructure, one is price competitiveness and second is the power business itself. Whether it has a strong connectivity with it will be critical Also, of course, there may be tax system changes.

But globally, the winning path in renewable energy, how to be in a better position, we need to be very flexible in working on our assets. So that is why we decided to sell Greenko and reinvest in AM Green. And also for Avolon, we have been driving forward. So for the policy of renewable energy business overall, we will not change because of the Trump’s tariff. That was all.

Unidentified Company Representative: Next, SMBC Nikko Securities.

Unidentified Analyst: I’m from Nikko. This is Page 8, capital recycling and capital profit and loss outlook. I would like to ask a question about that. First quarter of JPY 45 billion profit and Greenko will be reflected. So you’ve been putting on that, so JPY 140 billion seems to be the number. It seems that you’ll be able to reach the full year plan, since that you will consider observations. In terms of the capital loss, what is your outlook? So in the fourth quarter — so for instance, a long-term impairment or the goodwill impairment or the credit loss, CCL losses will be accumulated and ORIX Life. In terms of the unrealized loss is over JPY 600 billion for the bond portfolio. So teasing is one profit and to be able to improve the profit for the next fiscal year. How are your discussions going forward in terms of the portfolio realignment?

Kazuki Yamamoto: So as I mentioned on the right-hand side on Page 8, against the full year forecast. So basically, this is the same as we have announced our budget. So currently, it’s under review. That’s the reason we are saying this is under review. As you have pointed out, this JPY 41.5 billion in the first quarter, the Greenko gains are about JPY 93 billion. If you’d add that, the full year capital gain budget, including exit strategy, by project by project, we are reviewing the outcome. In terms of the — if we are going to change the financial outlook, it is not only what we have conducted in the past, but in terms of our planning is truly for this fiscal year, correct for this fiscal year, should we consider next fiscal year as opportunity.

In terms of the capital gain, the optimal timing, we are taking stock, trying and reviewing about the timing. In terms of the capital loss in the last fiscal year in the fourth quarter, so in terms of the Somahibiki plant, there has been some partial impairment. And in the U.S., individual impairment and the credit loss impairment has occurred. As you have made a question for CCL, until the previous year, there has been some reversals, but they have stopped. Well, from this fiscal year and onwards currently, we are trying to review what will be the right level of reserves. But basically we think that the outlook is more or less conservative. So this will be some of the things that we want to reflect for the full year outlook. In terms of the ORIX Life bond portfolio impaired under unrealized loss, it has improved compared to last fiscal year, but this is linked to the liabilities.

In terms of the actual performance against the real business as long as the large surrenders and cancellations, that is the standard, like a portfolio management conducted by life insurances. But ORIX Life, the long-term lump sum payment type of insurance, the surrender risk having that type of risk is limited because basically to offer medical protection type of insurance. So in terms of the nature of the insurance, I think they can absorb the risk. However, that said, in terms of the asset value and going forward, our valuation, if there is something that will have the negative in for the next fiscal year and onwards, they will address that. But currently, in terms of the capital loss, there is no major considerations. They are considering conducted right now.

Has this answered your question?

Unidentified Analyst: So if that is the case, in terms of the direction on a net basis, the Greenko JPY 93.4 billion of the Greenko shares will come in. So for the delaying some of the sales or even if there’s some capital as well, will come up. But in terms of the direction, you are looking in kind of upward trajectory.

Unidentified Company Representative: As you have mentioned, in terms of each of the exit deals of projects, more than we have assumed more high-quality investors at the interest rate environment, we have to individually, we view with the top management of each of the segments are considering these type of factors. And we are waiting for the review and then we want to communicate that as quickly as possible. .

Operator: Moving on from Daiwa Securities, Watanabe-san.

Kazuki Watanabe: This is Watanabe from Daiwa Securities. Regarding capital recycling, I would like to ask you regarding Acentic-TOB period did not extend and Panasonic projector business was gained in a short period of time. What’s the investment discipline? Were there any changes in your approach? And also JPY 30 billion dividend you will be carrying out. So why at this timing are you going to carry out the dividend payout?

Kazuki Yamamoto: Well, thank you very much for your question. Regarding Panasonic Connect projector business, I would like to explain why the agreement was released. So we were supposed to sign an agreement with Panasonic Group, and we had prepared accordingly. As was announced both parties had worked together, and that’s a fact. Meanwhile, due to tariff impact and economic situation, the outlook of this business was revisited. And given the strategy on our end, and between ourselves, there were a gap between the two companies regarding the expectation on the future business. And we quickly consulted with each other. So based on agreement, we decided to release the agreement. We decided to terminate the discussion. So it’s not that we were not able to reach an agreement, rather based on the rationale discussion, we discussed and agreed that we will not be making investment.

So within a certain risk tolerance, the initial business plan did we — were they feasible or not? In light of that, we made a decision. And for Sentec TOB, it did not achieve the number that we had expected. And thereafter, the price compared to our TOB price, it has been faring higher. It seems like meanwhile, Acentyx management team, we had a discussion many times. So we discussed about whether there’s a business synergy? Or is there a room for collaboration to improve corporate value? We have a relationship to continue to hold these discussions going forward as well. So this has been — the period has been not been extended and the price were not revisited. And as you said, based on investment discipline in light of the business value that we estimated, of course, we will not change our investment discipline just because we want to purchase.

So because of the decision by the business side, we did not — we decided not to extend and not revisit the price. In terms of timing, Sentec, there was an announcement this morning and also the market situation. These are impacting factors every time there’s TOB. So I’m sure certain accommodation will be necessary going forward. But every time we take time to make a final investment decision. So every time we will consider within the defined ratio of investment. And also the dividend payout, this was announced. We have been stacking up the profit. And also, the revenue has been growing, but in three categories. The finance segment, in terms of profitability, ORIX Bank compared to the peers, of course, they are not behind, it has maintained its decent profitability and asset has grown to a certain level, and it is being distributed.

So in order to grow profitability higher, we decided to return the capital to a certain extent. So in a stand-alone basis, at this point in time, the financial soundness of ORIX Bank has no issue whatsoever. And upon that, we decided to carry out the dividend. And going forward, for each group companies and the business segments, in order to contribute to a higher ROE of a group, we need to go into one by one and be mindful of ROE. So the dividend of ORIX Bank was based on the business strategy going forward. I hope this answered your question. .

Operator: Mizuho Securities, Sakamaki-san, please, .

Naruhiko Sakamaki: This is Sakamaki from Mizuho Securities. So I have one question. In terms of the shareholder return — so in terms of the flexibility of share buybacks in the year’s plan, you have been talking about that you have been good in your profit process in terms of the sales of Greenko, the — in terms of the capital you have more room. So what type of internal discussions have been conducted in terms of the shareholder return policy?

Kazuki Yamamoto: Thank you very much for your question. So in this Board of Directors has conducted today in the Q1 financial results based on that results, in terms of the discussions has been conducted. I think basically, the discussions will of course on the forecast going forward or the outlook going forward. I think in terms of the market environment that is solid in Japan, how much will the impact of the Trump tariff. And I think each of the corporations are trying to discern about that. The second point is that in the United States and China, we — at ORIX as a group, what type of business outlook should be established. In terms of the shareholder policy to be able to make a decision to these materials, we will have to look more deeply and then decide about our policy.

So that is the reason why we are saying that it is under review. But this fiscal year in May, we have said that we have said that we have of JPY 100 billion in the program. This will be quite flexible. In terms of the investment pipeline, for the Panasonic company, we have terminated that agreement. And with the Greenko sales, we have invested in green. And in terms of Hilco M&A, we have reached an agreement. So for the major projects, I think, basically, we have some visibility. So in terms of the — looking at the investment and the payback, if we consider that we have the capacity. And as the market condition shows that if there is a — Capital Market shows that it’s a good timing to conduct share buybacks, if we make that type of decision, we will make a decision under — after conducting discussions.

So maybe not an answer that but thank you very much.

Operator: Next, BofA Securities, Tsujino-san, please.

Natsumu Tsujino: About the return to shareholders, I have a question. First of all, in the first half dividend, how are you going to decide, 39% is the annual, but the profit seems to be skewing towards first half. So what are you’re thinking about? And also the additional buyback, and you talked about two major deals as well, but on 70% have completed the sale or it was agreed to. So maybe you will think about what to do with Avalon. Maybe you were thinking about it from about 2 years ago, and this discussion may progress or maybe you will look for a good third-party and whether you will be able to demonstrate your leadership, but the investment size will be quite significant. So taking all this into consideration and also thinking about the future, perhaps you will have to think about the buyback. So the next round of big investment, there may be several options. So I was wondering if this will turn out to be one of them.

Kazuki Yamamoto: So about the interim dividend to start with, know very well last year against the first half result, payout ratio was 39%, and that was our return. And as I mentioned earlier, for this fiscal year, Greenko importer. Looking at this, we will be skewed towards first half, nevertheless, will it be 39%. So when we announce interim financial closings, BOD will decide eventually. But our idea towards this dividend is what is fair. It would be a commitment towards the commitment of 39% against the result. And as long as we don’t have any negative factors in the second half, it will be across the board of 39% annually. So that is how we’ve updated. And for additional buyback, as you mentioned, Avolon’s 70%, the Hohai shareholder of 70% and CECO was 70% and CECO.

Among our overall capital policy, of course, these are important factors. And also, apart from the current pipeline, we have some other potentials. So we are looking into this very deep. And on the market, of course, being mindful of capital cost, this is quite important as we manage our business. So with and Takahashi-san, we have been holding discussions with the investors in EU and U.S. instead of stacking up the capital based on uncertainties, rather, we should be solid. And looking at the financial state of ORIX, the capacity is sufficiently maintained. So if the return becomes a bottleneck in investment, we will definitely avoid that to happen. So that is how we decided the size of buyback. And as of May, it was JPY 100 billion, and come interim financial results, there may be a certain appropriate amount.

So there are moving parts and taking into consideration the Avolon, we will decide if there is an opportunity, we want to make an investment go ahead. Although this was rather vague, I hope this answered your question. Thank you very much.

Operator: Next one Nomura Securities, Sasaki-san, please.

Futoshi Sasaki: So this is Sasaki from Nomura Securities. So I want to ask about the base profit. So I think it’s the latter half of the presentation material, the first quarter base profit increased. Where was it coming? As much as possible, can you talk about that, if possible, so from the second quarter onwards, so more than JPY 120 billion, is it sustainable? Or is it going to further increase? Can you please talk about that? Thank you.

Kazuki Yamamoto: So that will be Page 42, I think you’re looking at Page 42. As I said at the beginning of the presentation, in terms of talking about the segment profit, in terms of the level of base profit, this is a very solid level for the first quarter. but partially in this, the so-called — aside of the recurring base profit, some technical reasons — technical reasons, some has been booked in the first quarter. There is some of that type of has been booked. So if you compare it year-over-year, shown that before tax more than JPY 100 billion level. I think basically, we have been able to reach that level. But it’s our first quarter, I will not be able to tell you the exact number. For the bank business, there has been some one-off profits that has been included or in terms of the environment and energy, the capital — besides some capital gains, there are some technical numbers that has been included.

However, that said, up to now, in terms of the momentum, from 2 years ago — from second quarter onwards, more than JPY 100 billion of this profit has been achieved. In terms of maintaining this momentum, yes, we will continue to maintain this momentum. So in terms of other impacts, in terms of the performance of the PE investees, so it’s quite dispersed and distributed. I do not think that one specific investee will have a negative impact. But each of our investees are conducting very unique businesses. So we would like to manage these companies very steadily. But they may lead to some fluctuations in the future.

Futoshi Sasaki: In Yamamoto-san, may I ask? So maybe I didn’t understand what you have explained. So let me ask again. For this fiscal year’s guidance, you said that it’s under review. What is the meaning of under review? So simply thinking, so last year, you were not able to sell Greenko, you are not able able to achieve your targets. And then this year, it has been decided. So it maybe go up. So that’s kind of a simple thinking that I have. So have used the word under review. Is it that implication that the outlook has become negative? Or it’s just technically literally, you’re just thinking, so it’s under review. So can you please help me understand your thoughts.

Kazuki Yamamoto: I think what you said lately is what I was thinking. So when we disclose our buses in terms of the gains come from the sales of Greenko, so in terms of the buyer was reliant on the market conditions, it was a bit difficult to receive, but we have to compile about it. So for each of the segments, we have been expecting that each of the segments will be able to do the business And we disclosed the budget outlook of JPY 380 billion. From my point of view, the review of our forecast, including the Greenko sales. So it’s not just adding or subtracting what has changed against what is our forecasted performance for this fiscal year, we do want to answer that correctly and solidly. So as far as time allows, compared to initial budgeting, how are things are going to transpire from July and onwards from the top management for each of the heads of the business segments, we have closely communicated about that.

So I do hope that we will allow us more time to think about this. So it’s not that got better or worse. We are thinking that we are really looking into the budget, so that we can say that this is the revised forecast backed by solid reasons. So we do want to spend some time to be able to reach that conclusion.

Operator: So we’re closing in, but this will be a final question. SBI Securities, Otsuka-san, please. .

Wataru Otsuka: This is Otsuka from SBI. Can you hear me?

Kazuki Yamamoto: Yes.

Wataru Otsuka: Towards the back of the presentation on Page 46, Asset Management disclosure is given JPY 81 trillion at the end of June. And it doesn’t say here, but in the previous document, March 2025 towards the left, AM was JPY 74 trillion. I believe it was the number. So simply within 3 months, plus JPY 7 trillion, that’s disclosure. So I would like to know the background of this increase. So third-party asset management, I think you’ve talked about enhancing those areas. So I am now interested.

Kazuki Yamamoto: Takahashi-san mentioned this as well. So in mid- to long-term strategy, we would like to grow AUM through asset management that is the direction within mid- to long-term strategy. And on Page 45, 1 page before, that’s included on this page. And also, as you recall, at the end of March, AUM outstanding amount. It’s now JPY 81 trillion. So it has grown. And the major reason behind this increase, there are two. One is Noverco and other companies, the inflow of cash relatively speaking, towards this quarter. Well, although this was within our expectation, we were able to take them in. And prior to that, over the past 1 year, AUM was rather flat. But from previous quarter, the momentum of recovery started to be very clear.

Perhaps this is mainly due to product lineup and the investors understood that, and this led to the inflow. And also, U.S. stocks, equities, the market was good. So there was inflow and AUM outstanding. There has been a higher valuation. And for first and second quarter, it has been on the rise. So that was what we call related. And apart from that, in the U.S. CLO and securitization product arrangement business is underway. So this is a bit credit- related product, which has been quite successful. So in the past, as a hybrid model, balance sheet was being used, but once sold to investors, it will shift to AUM. So for CLOs, the outstanding amount is quite significant. So this was another contribution. Especially in case of U.S., because of the U.S. dollar, in terms of value terms compared to yen-based, the impact appears to be much bigger.

So there are other fluctuating factors, but there were valuation loss, but we’re able to absorb and tariff impact. So both in U.S. and Europe. I hope that I was able to explain the factors behind these numbers. So mark-to-market is another thing. So there’s a JPY 21.4 billion inflow. But I think market value is not that high. Stock base, as you say, there’s an impact on the market — of the market. So with Takahashi-san, just showing the numbers on the balance, it’s difficult to understand. So in individual IR meetings, he has received a lot of questions about the product profitability, and this is a home for myself as well. I hope that we will be able to sort this out and better explain to you in our disclosures going forward.

Wataru Otsuka: Well, thank you very much. I am looking forward to the detailed explanation going forward.

Operator: So the time has come to end this meeting, we would like to end the Q&A session. So Yamamoto will say some last words.

Kazuki Yamamoto: So thank you very much. In the first quarter, I think physically, we have seen come in terms of Greenko from that on last fiscal year, I think people were concerned about the situation, but we have been able to close the deal, and I think that was quite a favorable situation. On the other hand, and other investors has asked for the second half, we cannot be too optimistic. And for this fiscal year, the capital gain is concentrated in the first half. But for the full year business in itself, I would like to carry out a business steadily. In terms of the review and looking into the business environment, we will focus on these activities. And through communicating with you, I would like to clarify any issues. So I hope that you will be able to support the going forward. So this like to end the first quarter presentation results. So thank you very much.

Operator: So for the March 2026 first quarter, a briefing, I would like to end this meeting. Thank you very much for participating until the end.